Entero Therapeutics Implements Reverse Stock Split to Maintain Nasdaq Listing

Entero Therapeutics announced a 1-for-3 reverse stock split to comply with Nasdaq's listing requirements, reducing outstanding shares from 4.77 million to 1.59 million. The move aims to increase the per-share bid price above $1.00, maintaining its listing on the Nasdaq Capital Market. The company emphasizes the importance of Nasdaq listing for enhancing shareholder value.

Entero Therapeutics, Inc. (NASDAQ: ENTO) has announced a 1-for-3 reverse stock split effective August 18, 2025, aimed at regaining compliance with Nasdaq's listing requirements. The reverse stock split will reduce the company's outstanding shares from approximately 4.77 million to 1.59 million, with each shareholder receiving one new share for every three they currently hold. Fractional shares will be converted to cash [1].

The move is a strategic decision to meet Nasdaq's minimum bid price requirement of $1.00 per share under Listing Rule 5550(a)(2), ensuring the company's continued listing on the Nasdaq Capital Market. Richard Paolone, Entero's Interim Chief Executive Officer, emphasized the importance of maintaining Nasdaq listing for enhancing shareholder value and visibility [1].

The reverse stock split is expected to boost the per-share bid price above the required $1.00 threshold, addressing the immediate compliance issue. However, it does not address underlying valuation concerns or the company's ongoing challenges in the biotech sector, such as cash burn and pipeline progress [3].

Investors reacted negatively to the announcement, with ENTO's stock falling 5.7% following the news. Reverse stock splits are often viewed cautiously, as they can signal financial challenges and may not fundamentally change a company's market value [2].

While the total market capitalization remains unchanged, the reverse stock split will theoretically increase each share's value by three times. Shareholders will receive cash in lieu of fractional shares, ensuring no dilution of ownership. However, the split raises questions about future dilution if the company needs additional financing.

Entero Therapeutics is a clinical-stage biopharmaceutical company focused on developing targeted therapies for gastrointestinal diseases. The company's programs include Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency [1].

References:
[1] https://www.nasdaq.com/press-release/entero-therapeutics-inc-announces-reverse-stock-split-2025-08-14
[2] https://www.investing.com/news/stock-market-news/entero-therapeutics-stock-falls-after-announcing-reverse-stock-split-93CH-4192553
[3] https://www.stocktitan.net/news/ENTO/entero-therapeutics-inc-announces-reverse-stock-rox8avmy20g3.html